CR 04 11-Guests' Property

CR 04 11–GUESTS’ PROPERTY

(July 2019)

INTRODUCTION

This endorsement is designed for hotels, motels, and other lodging facilities. It covers the named insured’s legal liability for loss of or damage to guests’ property held in safe deposit boxes or inside the facility’s premises.

This analysis is of the 08 13 edition. Changes from the 08 07 edition are in bold print. It does not address changes in format that do not affect coverage. j

ELIGIBILITY

This endorsement can be added to the Insurance Services Office (ISO) Commercial Crime Coverage Form or Policy.

SCHEDULE

The endorsement schedule has spaces to enter information for two different coverages.

The first is Guests’ Property–In Safe Deposit Boxes. There are spaces to enter the Premises Address, Limit of Insurance per Occurrence, and Deductible Amount per Occurrence.

The second is Guests’ Property–Inside the Premises. There are spaces to enter the Premises Address, Limit of Insurance per Guest, Limit of Insurance per Occurrence, and Deductible Amount per Occurrence.

ANALYSIS

This is an endorsement to the ISO Commercial Crime Coverage Form or Policy and is subject to their conditions, definitions, and exclusions. The only changes are those within this endorsement.

A. Insuring Agreement

The insuring agreement has two parts:

1. Guests’ Property–In Safe Deposit Boxes

This coverage pays for loss of or damage to guests’ property when inside a safe deposit box within the named insured’s premises. The named insured must be legally liable and responsible for the loss or damage.

 

Example: A guest on vacation deposits cash and traveler’s checks in the named insured’s safe deposit box. The guest attempts to retrieve them but the box is empty. This loss is covered.

 

2. Guests’ Property–Inside the Premises

This coverage pays for loss of or damage to guests’ property located inside the named insured’s premises or that is in the named insured’s possession. The named insured must be legally liable and responsible for the loss or damage.

 

Examples:

  • The maid neglects to lock a guest’s hotel room door after she finishes cleaning it. Thieves enter the room and steal the guest’s clothing and laptop computer. This loss is covered.
  • The bellhop takes a guest’s suitcases after checkout and stores them for a few hours. When the guest returns, the suitcases are gone. This loss is covered.
  • A guest leaves a bracelet by her book at the indoor pool when she goes for a swim. When she returns, the bracelet is gone. Unless the named insured is legally liable for the loss based on a local statute, there is no coverage because the bracelet was not in the named insured’s possession or care.

 

The named insured may be sued for refusing to pay for loss of or damage to guests’ property. In that case, and if the named insured has the insurance company’s written consent to defend, the company pays reasonable expenses the named insured incurs and pays in that defense. The amount it pays is in addition to the limit of insurance.

 

Example: The maid neglects to lock a guest’s hotel room door after she finishes cleaning it. The guest discovers that her room was unlocked and claims that a laptop, phone, and thousands of dollars in jewelry were stolen. The hotel denies the claim because the guest could not prove the loss. The guest sues. The hotel had notified the insurance company of its suspicion before it denied the claim and received the company’s permission to defend so the company pays the hotel for its defense costs.

B. Limit of Insurance and C. Deductible

This insuring agreement uses a schedule to list the limits instead of entering them on the declarations. Each part of the insuring agreement has its own separate limit and deductible. Guests' Property–In Safe Deposit Boxes coverage has a per-occurrence limit and deductible for each address listed on the schedule.

Guests' Property–Inside the Premises coverage has a per-guest limit that is subject to the premises per-occurrence limit. The deductible scheduled applies per occurrence; not per guest.

The insurance company does not pay until the amount of loss is more than the deductible amount on the endorsement schedule. It then pays only the amount of loss that exceeds the deductible amount.

 

Example: A gang of thieves strike at the Villa Hotel. In addition to stealing hotel property, they remove $100,000 worth of guests’ items from the safe deposit boxes and an additional $100,000 from two guests. The hotel has a $100,000 limit per occurrence for guests' property in safe deposit boxes and that loss is fully covered. The limits for guests' property inside the premises coverage are $10,000 for each guest and $100,000 for each occurrence. The hotel receives $10,000 per guest for the loss inside the premises, for a total of $20,000 for that coverage. Because the per-guest limit is $10,000, even with a $100,000 limit per occurrence, the hotel has a total uncovered loss of $80,000.

D. Exclusions (08 13 change)

1. The exclusion for Acts Committed by Your (was “of” in the 08 07 edition) Employees, Managers, Directors, Trustees, or Representatives and the exclusion for Legal Fees, Costs, and Expenses do not apply to this insuring agreement.

2. Eight exclusions are added. Coverage does not apply to the following:

a. Loss that results from liability the named insured assumes under any written agreement. There is an exception. This exclusion does not apply to a written agreement the named insured enters into with a guest before a loss occurs that increases to an amount up to $1,000 more than any lower amount for which the named insured may otherwise be liable under a statute. This exclusion is only with respect to Guests’ Property–Inside the Premises.

 

Example: A local statute states that hotels are responsible for losses to guests’ property up to $5,000. The named insured’s contract with its guests states that it is liable for up to $6,000. Coverage applies because the additional amount is not more than $1,000. If the contract with guests states that the named insured is liable for up to $10,000, coverage applies to only the $5,000 statutory limit.

 

b. Loss of or damage to property that results from any fire

c. Loss of or damage to property that results from any liquid or food that spills, is upset, or leaks. This exclusion is only with respect to Guests’ Property–Inside the Premises.

d. Loss of or damage to property that results from wear and tear, inherent vice, gradual deterioration, insects, and animals

e. Loss of or damage to property in the named insured’s care and custody for cleaning or laundering. This exclusion applies to only Guests’ Property–Inside the Premises.

f. Loss that results from the named insured releasing any organization or person from legal liability.

g. Loss of or damage to articles or samples carried or held for sale or delivery after they are sold. This exclusion applies to only Guests’ Property–Inside the Premises.

h. Loss of or damage to any vehicle. This includes the vehicle’s accessories and equipment and any property contained on or in it. This exclusion applies to only Guests’ Property–Inside the Premises.

E. Conditions

1. The Records Condition in the Coverage Form or Policy does not apply to these insuring agreements.

2. This additional condition states that the insurance company is not relieved of its obligations under these insuring agreements if the named insured or its estate becomes insolvent or bankrupt.

3. The following condition completely replaces the Ownership of Property: Interests Covered Condition in the Coverage Form or Policy:

Ownership of Property: Interests Covered

The property these insuring agreements cover is limited to property that belongs to the named insured’s guests. Coverage applies only when such property is in a safe deposit box, is inside the premises, or is in the named insured’s possession. This insurance is for only the named insured’s benefit. It does not provide any benefits or rights to any other organizations or persons, including the guests. Claims for covered losses under these insuring agreements must be submitted to the named insured. The named insured then decides whether or not to submit them to the insurance company.

Note: This coverage is first-party coverage for the named insured’s benefit. It is not third-party liability coverage. The named insured must satisfy all conditions in the coverage form or policy and is the only party that can present the claim.

F. Definitions

The following definition is added to F. Definitions in the Coverage Form or Policy.

1. Guests’ property is money, securities, and other property that belongs to the named insured’s guests.

The following definition replaces the same definition in F. Definitions in the Coverage Form or Policy.

2. Premises is the interior of the part of the building at the address on the endorsement schedule that the named insured occupies in order to conduct its business.